Despite last week’s deepening Brexit jitters and UK political concerns, the Pound Sterling to Euro (GBP/EUR) exchange rate was able to recover towards the end of the week due to fresh weakness in the Euro (EUR).

After opening last week at the level of 1.1175, GBP/EUR briefly plunged to a three-month-low of 1.1010 before rebounding slightly.

In the second half of the week, GBP/EUR recovered over a cent and closed the week at the level of 1.1132. GBP/EUR has since continued to trend near that level, with weakness in both currencies leaving the pair relatively limp.

Last week’s Brexit news made markets concerned that UK politicians were no closer to being able to push a Brexit withdrawal plan into UK law, as MPs remained unable to agree on how the process should proceed.

On Friday though, data indicating a worse Eurozone economic slowdown than expected helped the Pound to Euro exchange rate to hold a modest recovery at the end of the week.

Last week saw a flurry of UK political and Brexit developments – but they ultimately did little to change the Pound outlook or improve Brexit clarity as politicians were left with even more uncertainties than before.

UK Prime Minister Theresa May delayed a key UK Parliament vote on her Brexit deal in order to attempt to acquire more assurances from EU officials on issues such as the contentious Irish backstop.

She also survived a vote of no-confidence from her Conservative Party in the middle of the week.

However, her attempts at acquiring EU assurances failed and she was left with an unpopular Brexit deal. On top of this, over a third of the Conservative Party had voted against her in the no-confidence vote. These factors left markets highly cautious.

The Brexit deal is no closer to becoming more popular among UK MPs. On Monday, Prime Minister May looked to play down speculation that a second EU referendum was possible, which also weighed on Sterling.

Last week’s Eurozone data was initially mixed, but in the end a seemingly dovish tone from the European Central Bank (ECB) as well as some underwhelming Eurozone PMI projections from Markit, left the shared currency weaker.

In its December policy decision on Thursday, the ECB formally announced the end of its aggressive quantitative easing (QE) scheme as expected.

However, despite this the bank appeared cautious about the Eurozone’s 2019 economic outlook, cutting its growth forecasts for 2018 and 2019 as well as indicating that Eurozone inflation was likely to weaken in the coming months.

This was followed on Friday by Markit’s December PMI projections for the Eurozone, which fell short of expectations in every major print. Eurozone manufacturing and services slowed to 51.4, with the overall composite print projected to slow to just 51.3.

It showed the weakest pace of growth for around four years and hinted that underlying growth in the Eurozone continued to slow rather than rebound at all, at the end of the year.

The news caused investors to sell the Euro at the end of the week, and the shared currency remained unappealing when markets opened on Monday.

Upcoming German business confidence data on Tuesday, as well as UK inflation stats on Wednesday, could influence some Pound to Euro (GBP/EUR) exchange rate movement in the coming sessions.

The Euro, in particular, is likely to remain sensitive to Eurozone ecostats amid concerns that the Eurozone’s economic activity is still weakening. Stronger Eurozone data may bolster demand for the Euro.

Sterling, on the other hand, may struggle to find much support in the coming sessions without some kind of development in the Brexit process.

There is still seemingly no path forward for Brexit, as the UK government’s negotiated deal lacks support, and the alternatives include a worst-case scenario ‘no-deal Brexit’, but also the possibility of a second EU referendum.

Any confirmed changes in the Brexit process’ current direction could cause major Pound to Euro (GBP/EUR) exchange rate movement this week.